UK factories cranked up production last month to report their strongest growth for two years, fuelling hopes Britain's economic recovery is gaining momentum.

Activity in the manufacturing sector rose for the third straight month as new orders picked up at home and abroad, according to the closely watched Markit/CIPS UK manufacturing purchasing managers' index (PMI).

The upbeat news adds to recent survey evidence that UK economic growth has accelerated over recent months and it reduces the likelihood of the Bank of England opting for any more stimulus at the new governor Mark Carney's first monetary policy meeting this week.

The growth will come as welcome news to the government as it maintains its mantra that the economy needs to rebalance towards manufacturing and be less dependent on services. The manufacturing sector currently makes up just 10% of the UK economy.

This latest survey suggests recovery was broad-based across the sector with textiles and clothing and food and drink enjoying the strongest growth.

The headline index rose to a 25-month high of 52.5 in June, up from 51.5 in May. That was well above the 50-mark that divides expansion from contraction and beat the forecast of 51.5 in a Reuters poll of economists.

Survey compilers Markit said the survey suggested that manufacturing output rose by around 0.5% over the second quarter of this year.

Rob Dobson, senior economist at Markit said: "The UK manufacturing sector made positive strides on the recovery path during the second quarter of the year. June saw output and new order growth hit rates not seen since early 2011, as a brightening domestic market and resilient overseas demand led to a broad-based expansion across the sector."

Economists said the survey added to signs the overall economy gathered pace in the second quarter after lacklustre growth in the first three months of the year when manufacturing declined.

Howard Archer, at IHS Global Insight, said three consecutive months of expansion indicated by the survey "fuels hope that the sector is establishing genuine recovery".

"The indications are therefore that manufacturing output achieved clear expansion in the second quarter, which reinforces hopes that GDP growth was stronger and more widely based than it had been in the first quarter. Indeed, it is looking like the GDP growth rate could have doubled in the second quarter from the 0.3% quarter-on-quarter rate seen in the first quarter," he said.

So far, the pickup in output and orders does not appear to be boosting job creation in the sector, according to the survey. The employment balance was broadly unchanged in June.

Separate PMI surveys by Markit for the eurozone showed manufacturing there continued to suffer an overall drop in activity in June but the pace of decline slowed. The headline balance rose to a 16-month high of 48.8 from 48.3 in May.

Markit said output rose in both Germany and the Netherlands, but it was the periphery where the most encouraging signs were being seen. Ireland and Italy returned to growth, and the rate of decline in Spain eased sharply. Greece and France were the worst performers.

Chris Williamson, the chief economist at Markit, said: "Eurozone manufacturing is showing welcome signs of stabilising. Both output and new orders barely fell during June, and on this trajectory a return to growth for the sector is on the cards for the third quarter."